Bankruptcy can stay on your credit report for up to 10 years, but it may also be the best way to fix your credit score for good. According to NerdWallet, you may have a better credit score a year after filing for bankruptcy than you did before you filed.

Many people who file for bankruptcy do so after a long and difficult struggle to pay their bills and debts. While fighting to keep your credit and financial situation intact, you cannot add positive entries to your credit report to offset negative entries. After a bankruptcy, however, you are working with a clean slate. You simply have one bad mark on your credit report and endless opportunities to improve it as you move forward.

The following steps can help you rebuild your credit after bankruptcy:

Step 1: Know Your Credit

Check your credit score often and use the same service every time. When you look at your credit report, make sure all the information is correct and dispute any errors. Although there may be negative information, late payments and bankruptcy will not be on your credit report forever, and the more positive information you add, the less glaring they will seem.

Monitoring your credit can also help you protect yourself from identity theft.

Step 2: Explore Credit Products

Obtaining loans and credit cards may be more difficult after bankruptcy, but certain products are available to help you build credit. Secured loans, for example, are almost like loans you make to yourself, as you borrow money you have already deposited and pay it off over time. While you cannot use your deposit during a secured loan, you will get most of your money (aside from fees) back when the loan is paid off. Similarly, secured credit cards allow you to borrow against a deposit you pay.

While secured borrowing usually has higher annual fees and interest rates, you will only need to use these credit cards and loans until your credit improves. Over time, you will be able to get a better credit card or a more traditional loan.

You can also ask your friends or family members for help. Becoming an authorized user on a loved one’s account or having them co-sign for credit applications can help you get and build credit, as long as you honor the trust involved in these kinds of relationships.

Step 3: Bills and Budgets

The keys to bouncing back after bankruptcy include paying your bills on time and keeping credit balances low. Do not use more than 10% of your available credit – even on a shared or secured credit card – and do not apply for too much new credit. Consider using one loan or credit card at a time until you have built up your credit and are ready for a larger loan, like a mortgage or a car payment. Taking it slow is the best way to repair your credit and improve your FICO score for larger loans in the future.

Creating a monthly budget and building an emergency fund can help ensure you are not spending more than you can pay back, even when unexpected expenses hit.

Reclaim Your Financial Future With Dethlefs Pykosh & Murphy

At Dethlefs Pykosh & Murphy, we understand how important a clean slate is to your credit score and financial future. We want to help you get one.

For bankruptcy help or help filing a Chapter 7 or Chapter 13 bankruptcy, please contact us at (717) 975-9446 or online today